After years of financial distress and months of final negotiations, Stockton in late June filed for Chapter 9 bankruptcy protection in federal court. It was the readers' pick for the No. 2 story of the year and it will continue to be a big story in 2013 as the process moves through the courts.

The city had already made $90 million in budget cuts over three years before the City Council agreed to file for bankruptcy when facing a shortfall of an additional $26 million. City leaders say the blame lies with generous employee benefits, an unfunded health care liability in the hundreds of millions of dollars and debt on projects, including the city-funded marina and downtown sports complex.

The stakes of bankruptcy are high, going beyond the impact of years of cuts to city services and employees, as retirees face the loss of health care benefits they have come to depend on and investors stand to lose millions of dollars betting on Stockton.

Before Stockton can begin to emerge from bankruptcy, it has to prove in court that the city is, indeed, bankrupt. A judge is expected to decide on that early in 2013.